CP2’s A$2.2bn offer for Aussie toll road green-lighted

About 80% of shareholders in ConnectEast, which operates Melbourne’s EastLink toll road, have said ‘yes’ to CP2’s offer. The latter has raised A$1.4bn from Korea's National Pension Service, the UK’s Universities Superannuation Scheme, and Holland's APG to help fund its bid.

A majority of shareholders in Sydney-listed toll road operator ConnectEast, which operates Melbourne’s EastLink toll road, have approved an acquisition proposal from an investment vehicle led by Australia’s CP2.

CP2 offered A$2.2 billion (€1.6 billion; $2.17 billion) in July to acquire the 65 percent of EastLink that it does not already own. The Australian infrastructure investment firm said the cash offer of A$0.55 per share represented a 22.2 percent premium over ConnectEast’s July 21 closing price of A$0.45.  “ConnectEast will now seek judicial advice from the Supreme Court of Victoria to proceed with implementation of the scheme,” the firm said, with a hearing scheduled for October 4.

CP2 plans to make the acquisition through a vehicle called Horizon Roads, according to an earlier presentation to ConnectEast shareholders. 

Other investors in the vehicle include the UK’s Universities Superannuation Scheme, the New Zealand Superannuation Fund, Danish pension fund manager ATP, Dutch pension fund manager APG, Korea’s National Pension Service, the China Investment Corporation, the Teachers Insurance and Annuity Association of America, and the Korean Teachers Credit Union. CP2 said it has managed to raise A$1.4 billion from these investors.

“ConnectEast is a good asset for patient, long-term investors,” Syd Bone, CP2 managing director, argued earlier this year.

ConnectEast won the contract from the Victorian government to build and operate the EastLink road in late 2004 and operates the road under a 39-year concession. CP2, which manages assets of about A$2 billion, is ConnectEast’s largest shareholder and has been increasing its stake in the company since 2008.

In May 2010, CP2, together with the Ontario Teachers’ Pension Plan Board and the Canada Pension Plan Investment Board, offered A$7.2 billion for Australian toll road developer Transurban, but the bid was ultimately rejected by shareholders.